Short-term benchmark interest rates in the money market dropped sharply due to strong inflows that eased liquidity pressures in the banking system. As a result, the Nigerian Interbank Offered Rate (NIBOR) declined across all tenors, driven by an improved funding profile that led local deposit money banks to scale back on borrowings.
Data from the FMDQ Securities platform, cited by investment firms, showed that key money market indicators trended downward. The Open Repo Rate (OPR) fell by 4.92% to 28.50%, while the Overnight Lending Rate dropped by 4.50% to 28.33%.
The financial system deficit narrowed significantly, declining by 94% to ₦56.83 billion. This was attributed to a sharp reduction in withdrawals from the Central Bank of Nigeria’s (CBN) Standing Lending Facility (SLF), which fell from ₦1.71 trillion to ₦486.23 billion, according to TrustBanc Financial Group Limited.
Throughout February, the interbank market has faced persistent liquidity challenges, primarily due to large outflows from Open Market Operations (OMO) and Federal Government of Nigeria (FGN) bond settlements. The month began with a liquidity shortfall following a ₦1 trillion OMO auction and Cash Reserve Requirement (CRR) deductions, pushing the Overnight Policy Rate (OPR) and Overnight Rate (OVN) above 32%.
Rates have fluctuated as the CBN continues its liquidity management efforts to curb inflation. Despite a decline in headline inflation last month, the central bank has maintained high interest rate benchmarks to attract foreign portfolio investors.
